Most enterprises are topic to varied audits all through their monetary yr. However one frequent query that arises within the thoughts of each such entrepreneur is that why are they topic to totally different audits?
Since it’s all associated to tax shouldn’t or not it’s one audit?
So, right here we deliver to you the distinction between the three frequent audit sorts that your group could also be topic to,- Statutory Audit, Tax Audit and GST Audit.
Statutory Audit
Statutory Audit because the title suggests is a obligatory audit for all corporations. Each entity which is registered beneath the Firms Act, as a Personal Restricted or a Public Restricted firm has to get its books of accounts audited yearly. One of these audit just isn’t conditional, it relies upon upon the entity kind.
Thus, in case your entity is an organization, it’s essential get a statutory audit performed from a Chartered Accountant, on your firm
Tax Audit
Tax Audit is a conditional audit, performed beneath the rules of Revenue Tax Act. The Act states that if the turnover of any enterprise is greater than 1 crore, and in case of pros if the worth of providers is greater than Rs. 50 lacs then they need to get their books of accounts audited by a Chartered Accountant.
The one exemption right here is that if the enterprise has opted for the Presumptive Taxation scheme, then the entity doesn’t need to get its books of accounts audited. However this scheme just isn’t relevant for corporations, which suggests for each firm whose turnover crosses Rs. 1 crore for the monetary yr, has to get its books of accounts audited.
GST Audit
GST Audit is a brand new audit kind, which is performed beneath the Items and Service Act. In any such audit, any entity whose turnover is greater than Rs. 2 crores in a monetary yr, has to get its books of accounts audited by a Chartered Accountant.
This audit is performed to examine whether or not the enterprise has complied with all the foundations and rules laid down by the CBEC in respect of GST. Additionally, whether or not the organisation has duly collected and paid the GST on time.
Let’s take a look at a comparative evaluation of the three audit sorts
Comparative Evaluation
| Foundation of distinction | Statutory Audit | Tax Audit | GST Audit |
| Governing Act | Firms Act, 2013 or some other statute governing the entity. | Revenue Tax Act, 1956 | Items & Service Tax, Act |
| Applicability | All Firms | All | All |
| Circumstances | All Firms | Any entity whose enterprise has a turnover of greater than Rs. 1 Crore | Any entity whose enterprise has a turnover of greater than Rs. 2 Crore or if directed by the Dept. |
| Audit Sort | To examine the whether or not all of the disclosures and compliances have been made in response to the Firms Act | To examine all of the revenue, bills and associated transactions in order to examine whether or not all tax has been calculated pretty and all of the disclosures are correct. | To examine the whether or not all of the disclosures and compliances have been made in response to the GST Act and that the taxes on the identical have been duly paid. |
| Auditor | Chartered Accountant | Chartered Accountant | Chartered Accountant or Value Accountant |
| Report Submission | Shareholders | Revenue Tax Division | CBEC |
| Nature of Audit | Obligatory | Conditional | Conditional |
I hope now that you’ve this text, you’ll have a greater concept as to which audit is your entity topic to and why. It’ll additionally provide you with a readability on what every audit kind focuses on.